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What are the limitations of standard costing?
- Practically it is difficult to establish standard costing
- Frequent revision of standards is costly.
- In the short period of time, standards become rigid.
- Setting of standards creates frustration among the employees due to the non achievement of the same. Thus, sometimes it creates adverse effects.
- Every organisation has different set of parameters to set standards for themselves. Thus, it may not be suitable in all types of organisations.
- It will be difficult to properly examine the variance due to various random factors.
- Management’s lack of interest in the standard costing makes it inefficient means of cost control.
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